Dear Mr. Trudeau: A Reformed Debtor’s Plea

Congratulations on the stunning majority that you and the Liberal Party of Canada have won as the result of Monday’s election. There is something larger than life about this victory. You brought your party from a distant third place to a decisive first. You did so against the backdrop of relentless negative attack ads aimed at you. You have summoned the richness of history with your name. Trudeau.

But I’m worried.

You have been refreshingly honest in stating that you intend to increase our national deficit in order to finance your promise of positive change. Honesty is a good thing. Positive change is a good thing. But debt isn’t.

I am among the majority of Canadians who have contributed to our nation’s record levels of household debt. As you know, our average household debt-to-income ratio has skyrocketed in the last few decades. In 1990, it sat at 93%, meaning that for every after-tax dollar earned, 93¢ was owed. Now it sits at 163%; we owe $1.63 for every take-home dollar earned in some form of debt. And the options are limitless: credit card debts, lines of credit, student debt, car loans, mortgages . . . Most of us don’t even notice the precarious situation in which we’ve put ourselves. We carry our debts comfortably, easily able to make minimum payments and always welcome to borrow still more to “make our dreams come true.”

But some of us know better. When income is suddenly diminished through job loss, divorce, death of a spouse, or illness – and when expenses suddenly surge with the unexpected – those minimum payments aren’t so comfortable anymore. That’s why our record breaking personal debt-to-income ratio is accompanied by our record levels of personal financial distress and personal bankruptcy.

Some of us are trying to change. To turn our financial reality around. To pay off debt and increase savings. To recognize the siren call of marketers and to ignore it. To turn our knee-jerk “yes” into a sobered “not yet”. Delayed gratification. Frugality. Budgets. They don’t seem like the stuff of “dreams come true” still marketed so effectively by those whose interests are served by our debts. But they are.

I woke up Tuesday morning to what really felt like a different country. I could sense the change despite my reservations. There was a boosted energy and the hope of new beginnings. I want to share in your optimism, and I want to believe that your promises are attainable.

One of my earliest memories is of holding up a sign that said “Trudeau” in 1968. I was four years old, and my parents were utterly inspired by the entrance of your father onto Canada’s political scene. Intelligence, wit, boldness, charisma – he had it all. And he captured the imagination of a nation with his vision of a just society, leading us to a broader and deeper embrace of the French language, to a celebration of our multi-cultural composition, to forward momentum in our assertion of women’s equality, to new freedoms, new rights. And debt. Lots more debt.

The past and the present are intertwined, but that doesn’t have to be a point of contention. It is possible to rise above condemnation, to build upon all that is good in the foundation that history has provided us, and at the same time, to face all that is harmful in it and declare a resolute “Not this time around!”

The normalization of debt has crept upon individuals and governments with the same insidious deceit. Pervasive financial distress is the result. Weakened nations are the result. Margaret Atwood’s book Payback: Debt and the Shadow Side of Wealth, timely in its 2008 publication, identifies debt as society’s latest addiction. Deeply rooted in systems of faith and law, the force of payback is one that we must not ignore. In disregarding it, we sabotage our financial present. The entitlement and the taker’s attitude that fuel indebtedness damage more than our money. With a broader understanding of debt beyond finance, and an application of payback to a pillaged planet, we must also recognize that by maintaining our state of denial, we threaten our future.

With a fierce wake-up call, a plan, and three years of working it, my husband and I have changed our financial reality significantly. We have faced our past errors with humbling honesty, and we’ve changed our direction with intention. We don’t finance our vision for our future with borrowed money, and that vision is becoming more and more attainable as our debt drops bit by bit by bit.

And so I can’t help but urge you, as you take on your new role and work towards the vision that has won your leadership of Canada, that you apply fierce and fearless honesty to all that must be corrected in our country. In pursuit of the social imperatives, yes, but also with respect for the financial imperatives that are so stubbornly connected to our well-being. Debt requires payback. My plea is that you approach it with caution and that you work with a zealous mission to reduce it.

I wish you well in the days ahead. I look forward to the fruits of your leadership. And although my optimism is cautious, I believe in you. Balance you passion with reason. Balance the books with honest, tough choices. Forge ahead with clarity. With prudence.

prudencedebtfree

Okay, I”m not smart enough to leave either, so here’s my comment, although I’m sure it will be sort of like an armadillo being asked to make fine jewelry. I haven’t been following the news, so I don’t know anything about your latest elections, but I am super impressed with your open letter. It reveals a lot of pain, but also a lot of hope, that other people, and governments (which, let’s face it, have their own agendas, not always for the good of you and I), will wake up and get their collective crap together like you and DH did. Just keep up the good work, Ruth. You’re helping with the smelling salts, maybe one person, group, or peoples at a time, but you’re helping more people than you’ll maybe ever know.

You are more than smart enough! I’m glad you didn’t “leave”. I don’t know how aware most Americans are of our recent election, but it was certainly big news around here. Trudeau has presented himself as someone who wants to listen to the people, so I’m directing my voice to the issue that most worries me. I don’t know who will hear it, but it feels right to have spoken. Thanks, Kay. I appreciate your comment : )

Here in America, we prefer to lie about whether or not our policies will raise the deficit. Debt is certainly enticing in the world over, and Canadians share a “debtor’s advantage” in having an economy so closely tied to the USD.

Sadly, both the US and Canada are spending at such a velocity that even rapid GDP expansion of 7-10% (as in the late 90s) won’t bring the deficit down. I hope that Mr. Trudeau listens to you, and I hope that here in the US we bring our spending down a touch (or you know by about 18%).

American politicians don’t have a monopoly on lying about their budgets, Hannah. It was actually refreshing to have Trudeau tell it like it is. No matter what our politicians do, we as individuals each have a margin of power to change our situations. I’m sure neither of our governments will cut spending by anything close to 18%, but you and your husband have already exceeded that number. And so have we : )

One thing that I appreciated about Trudeau’s policy regarding the budget is that he was transparent in his declaration of running a deficit. This year, Harper essentially ran a deficit, only balancing the books by shuffling money around and withholding some payments until after the budget had been announced. This false advertising is dangerous. It’s essentially a form of debt denial, preventing us from taking a hard, critical look at why we have been in a recession.

I certainly don’t want Canada going into major debt, but given how Harper put all of our eggs in one resource-extraction basket, it makes sense to me that we need to invest a little to diversify our economy again. I want to believe that, in planning for a deficit, the Government of Canada will be better able to control our debt.

Being in my mid-20s, Harper is the only prime minister I have really known. I was too young to have much of an opinion on, or even an awareness of Martin or Chrétien’s policies, so I can only compare Trudeau to Harper. I’m sure other PMs have promised short-term deficit for long-term gain, and have failed to deliver on those promises, but I choose to be cautiously optimistic! (while monitoring websites like https://www.trudeaumetre.ca/)

So what do you think? Is it ever a good idea to run small, short-term deficits to invest in a country’s future? Or does the unpredictable global economy make that too risky?

So glad you commented, Bridget! I saw that TrudeauMetre site.What a great tool of accountability! I too am glad that Trudeau was straightforward about his intentions to increase the deficit. And to answer your question about whether or not a short-term deficit increase is ever a good idea, I would have to say “Yes.” I have friends who were 2 months away from paying off their mortgage when they found out their foundation had cracked, and they needed to spend $40,000 to repair it. They went into debt to finance it, and that was the right decision. Trudeau’s plans are to improve what many would claim is a flawed economic foundation, and I’m ready to hope with the majority that the changes he’s spearheading will lead to greater prosperity. My friends paid for the repairs to their home’s foundation within a year. They had become so disciplined in debt-reduction that it was a no-brainer: of course they would make it a priority to pay it off. I hope that we’ll be able to say the same of this government’s attitude towards a short-term increase in deficit-spending: “of course it was short-term.” Time will tell. Thanks again for your comment, Bridget.